CONSEQUENCES OF THE UNITED KINGDOM’S WITHDRAWAL FROM THE EUROPEAN UNION: N° 1 THE BRITISH JUDGES
Intention to leave the EU
The United Kingdom of Great Britain and Northern Ireland (“UK”) notified the European Council that it intended to withdraw from the European Union (“EU”) by a letter of 29 March 2017 in accordance with the procedure set out in Article 50 of the Treaty of European Union.
Withdrawal
Following ratification of the Withdrawal Agreement, withdrawal formally took place with effect from midnight Central European Time (“CET”) which was 23:00 in London (Western European Time “WET”) on Friday 31st January 2020.
Transitional period
The United Kingdom is no longer a Member State of the EU as of 1 February 2020. However, a transitional period, agreed as part of the Withdrawal Agreement, will last until 31 December 2020. (Although in principle the UK government could request an extension of the transitional period, it has legislated to the effect that it will not do so.).
Institutional implications
From 1 February and throughout the transitional period, the UK will no longer be represented in the EU institutions including the European Parliament and the Council of Ministers. As a third country the UK will no longer participate in the EU’s decision-making processes.
Mandates of the British Judges of the European Courts ends
On 31st January, the Court of Justice (“CJEU”) took formal notice that the effect of the withdrawal of the UK from the EU was to bring to an end the mandates of the British Judges (at both the General Court and the CJEU) with effect from midnight.
However, the United Kingdom continues to be considered an EU Member state during transition
On the other hand, the transition period foreseen by the Agreement on the withdrawal of the United Kingdom of Great Britain and Northern Ireland from the European Union, of October 2019, and in particular Article 127 6. thereof, provides that for (most) legal purposes the United Kingdom will continue to be considered as an EU Member State until the end of the transition period (31st December 2020):
Article 127 6. “Unless otherwise provided in this Agreement, during the transition period, any reference to Member States in the Union law applicable” (…), “shall be understood as including the United Kingdom”. (Emphasis added.)
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63rd UIA Congress Luxembourg
At the UIA Annual Congress in Luxembourg, Len HAWKES (FLINN) gave two presentations: the first for the Robotics and AI Commission, the second for the Commission on Privacy and Rights of the Digital Person.
In the Robotics session, on Friday, November 8th, Len’s presentation was titled: ‘What work is ICO Preparing on Artificial Intelligence & Why?’ The presentation examined the work of the UK Information Commissioner’s Office under three headings: i) the Project ExplAIn initiative, ii) the proposed AI auditing framework and iii) Data Analytics and Political campaigns. Other speakers were: Grant DAVIS-DENNY, Munger, Tolles & Olson LLP, Los Angeles; Jérémy BENSOUSSAN and Alain BENSOUSSAN of Lexing Alain Bensoussan Avocats, Paris.
For the Privacy Commission, on Saturday morning, November 9th, Len gave an up-date on GDPR and Brexit based on two possible scenarios a) ratification of the Withdrawal Agreement and implementation of the Political Declaration; and b) No Deal (which is still a possibility in certain circumstances). Other speakers were: Grant DAVIS-DENNY, Munger, Tolles & Olson LLP, Los Angeles, USA; Eliana A. Silva de Moraes, Sao Paulo, Brazil; Elisabeth Thole, Van Doorne N.V., Amsterdam, the Netherlands; Pradeep KODIYATH PATINHARE, Poduval Legal, Kochi, India.
The slides for Len’s two presentations are available below :
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GDPR ISSUES IN THE M&A PROCESS: 14TH International M&A CONFERENCE – VERSAILLES
M&A practitioners are more and more confronted by GDPR issues when assisting their clients. This matter was addressed by FLINN during the 14th International M&A Conference, which took place from 1 to 3 November in the prestigious TRIANON PALACE hotel in Versailles.
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The GTDT Practice Guides – Franchise has been published!
FLINN lawyers, Leonard Hawkes and Benoit Simpelaere, have contributed on part 5: Other Legal Considerations, Electronic Commerce, Social Media and Franchising to the published Practice Guides: Franchise 2019.
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‘To be, or not to be’ … Brexit, Act III (with apologies to William Shakespeare)
Scene 1: The risk profile of key border-related systems
On February 28, the House of Commons Public Accounts Committee issued a statement that it had published as evidence, a National Audit Office memorandum, “The UK border: preparedness for EU exit update”.
Commenting on the memorandum the Committee Chair, Meg Hillier (Labour, Hackney South and Shoreditch) said:
“The NAO’s memorandum shows that with the clock ticking down there remain serious questions about whether the UK will be prepared at the border if there is ‘no deal’ and what this would mean for individuals and businesses.
It is alarming that six of the eight critical IT systems needed are in danger of not being ready in time and that government assesses readiness of traders as one of its most significant risks”.
The Public Accounts Committee will be pressing for answers on preparations for EU exit this week.
Scene 2: Summary of Specific Negotiating Objectives ~ United States – United Kingdom negotiations
On February 28, the Office of the U.S. Trade Representative submitted to Congress and released a summary of the Trump administration’s specific negotiating objectives for a United States-United Kingdom trade agreement.
The summary document consists of brief bullet point objectives.
Agricultural goods, the US objective is to secure: … ‘comprehensive market access for U.S. agricultural goods in the UK by reducing or eliminating tariffs’;
On the other hand, the agreement should provide for: … ‘reasonable adjustment periods for U.S. import-sensitive agricultural products, engaging in close consultation with Congress on such products before initiating tariff reduction negotiations’. (Emphasis added.)
Sanitary and Phytosanitary Measures (SPS):
Establish a mechanism to quickly remove unwarranted barriers that block the export of U.S. food and agricultural products in order to ‘obtain more open, equitable, and reciprocal market access’.
‘Include strong provisions on transparency and public consultation that require the UK to publish drafts of regulations, allow stakeholders in other countries to provide comments on those drafts, and require authorities to address significant issues raised by stakeholders and explain how the final measure achieves the stated objectives’. (Emphasis added.)
National Farmers’ Union (‘NFU’) President, Minette Batters, said:
“The NFU has been very clear on this point. It is imperative that any future trade deals, including a possible deal with the USA, do not allow the imports of food produced to lower standards than those required of British farmers”.
“British people value and demand the high standards of animal welfare, environmental protection and food safety that our own farmers adhere to. These world-leading standards must not be sacrificed in the pursuit of reaching rushed trade deals. We should not accept trade deals which allow food to be imported into this country produced in ways which would be illegal here”. (Emphasis added.)
Scene 3: The Attorney General’s ‘fig-leaf’
The so called “backstop” provision in the Withdrawal Agreement is intended to avoid the return of a hard border between Ireland (an EU member state) and Northern Ireland. It has become a sticking point regarding approval of the UK Government’s Withdrawal Agreement and is fiercely opposed by the so called ‘Brexiteers’ and the Democratic Unionist Party in Northern Ireland.
At the time of writing (March 4) various recent reports, in the national and international press (Times, Telegraph, Reuters), suggest that the Attorney General, Geoffrey Cox, instead of trying to introduce either a hard time-limit or unilateral exit mechanism regarding the backstop, is trying to secure an arbitration mechanism that would allow Britain or the European Union to provide formal notice that the backstop should come to an end. Reportedly, the EU is resisting demands for such a mechanism, which would fall outside the Court of Justice of the European Union’s (CJEU) jurisdiction and authority to resolve EU law disputes. (See Article 19, Treaty on European Union; Articles 267 and 344 Treaty on the Functioning of the European Union; and the Judgment of the CJEU in Case C‑284/16, Achmea, of 6 March 2018.)
The issues summarised above, taken overall, only show a small part of the complexity of exiting the EU. They indicate that a delay beyond the current March 29th deadline looks sensible. Further, we can suggest that arguments in favour of a second referendum (that would ask if the reality of this Brexit is what was voted for), look much stronger …
(…) ‘For who would bear the whips and scorns of time,
The oppressor’s wrong, the proud man’s contumely,
The pangs of despised love, the law’s delay,
The insolence of office and the spurns
that patient merit of the unworthy takes,
When If he himself might [be permitted] his quietus [to] make’,
Or, is there really a concern that … ‘the native hue of resolution’ will be ‘sicklied o’er with the pale cast of thought’, … ?
Read MoreBrexit: The Morning after the Night Before
The British Prime Minister, Mrs Theresa May, lost the Parliamentary vote on the withdrawal agreement negotiated with the European Union last night (15th January 2019) by 230 votes. It is the largest parliamentary defeat for a UK government in over a hundred years. If, as predicted, the resulting vote of no-confidence in the government is nevertheless defeated itself this evening (16th January 2019), Mrs May is due to return to Parliament next Monday (21st January 2019) with her Plan B. If there is no negotiated agreement on Britain’s divorce from the EU, ‘Brexit’ is scheduled to happen in just over ten weeks’ time on 29th March 2019.
Whether its questions are about access to the United Kingdom market or about imports from the United Kingdom arriving in the EU: what happens next really matters to business. Immediate reactions within the Parliament chamber called for a postponement of the 29th March deadline. But unless and until that happens, the default legislative position remains that (in accordance with the notice given under Article 50 of the Treaty on European Union) the UK will leave the EU and become a ‘third country’ that night.
There does seem to be a cross-party majority in the UK Parliament against a disorderly exit from the EU. However, as the Prime Minister remarked immediately after hearing the result of the vote rejecting the withdrawal agreement, it remains unclear what other arrangement (if any), and on what terms, could command the support of a majority of MPs and also be accepted by the EU.
So, in summary, the clock is currently ticking down towards a disorderly Brexit. Notwithstanding the statements and documents issued by both the British government and the EU, businesses on both sides of the Channel do not generally seem prepared for a ‘no-deal’ exit. Even if, contrary to some expectations, the pound sterling (UK£) did not suffer a dramatic fall in value after the vote, uncertainty is already affecting orders and investments, particularly in the UK.
If you’re a business that trades across borders with the UK and, for example, you rely on just-in-time supply chains (and there are many manufacturing businesses beyond automobiles, for example in the food and drink industry that have such supply chains), the prospect of a ‘no-deal’ exit has serious negative implications. Some argue that last night’s vote makes such an outcome more, rather than less, likely. So, even if you are an optimist and resistant to incurring costs unnecessarily, it is very much time to assess the possible impacts of ‘no-deal’ on your business and take counter measures.
As a first step, it’s useful to know that a ‘quick-scan’ for possible issues can be made using a free tool available from the website of the FOD Economie / SPF Economie (Belgian Federal Economic Services) (the tool is available in Dutch, French and German language versions). Even if the tool acknowledges that it has limitations, using it should enable you to identify potential supply chain problems. Check whether you may be faced with additional customs verifications, tariffs or procedures (= potential delays) for imports from or exports to the UK.
In the case of a ‘no-deal’ Brexit, imports from the UK will be subject to the EU WTO import tariffs. The EU’s import tariffs, adopted in-line with its WTO obligations, are published and ‘knowable’. (They are applicable to all the countries with which the EU does not have a trade agreement.) You can look-up what they are for any products that you import.
As one example, beef imports (high quality, boneless, fresh or chilled) to the EU from any ‘third country’ are subject to a compound EU WTO import tariff (i.e. a tariff calculated partly by customs value and partly by weight) of 12.80 % (ad valorem) + 303.40 EUR / 100 kg.. Based on 2016 prices, the Irish Agriculture and Food Development Authority calculated that in percentage terms that amounts to a sixty percent (60%) tariff.
Another important area for verification concerns the terms and conditions of your contracts. For example: Is there a territorial clause which assumes that the United Kingdom is a member of the European Union? What is the currency for payment? What law is the contract subject to? Is there a mechanism for contract review in light of changed circumstances? Is there a mechanism for adjusting prices and if so on what basis? How would any additional costs incurred as a result of Brexit be allocated as between the parties?
While a negotiated Brexit settlement, including a transitional period during which a free trade agreement can be negotiated, may yet be possible: every prudent business will take into account that the time within which such arrangements can be reached is, currently, very short indeed.
* Len Hawkes is a solicitor, England and Wales, and is in charge of FLINN’s Brexit Desk.
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Online platforms : Commission sets new standards on transparency and fairness – Brussels 26 april 2018
The European Commission has proposed a Regulation that would provide new rules for Online Platforms (OP). The aim is to create a fair, transparent and predictable business environment for smaller businesses and traders when using OP. Ultimately, it will also benefit European consumers.
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Strengthened EU data protection rules become a reality in just over 100 days !
With just over 100 days left before the application of the new General Data Protection Regulation (“GDPR”), the European Commission has published new guidance that outlines what remains to be done, including additional guidance for SMEs.
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Is the GDPR applicable in a (pure) B2B Context ?
On Tuesday, 6th December, we had our second client workshop about the GDPR. The diverse audience included retailers, manufacturers in the food and beverages industry, franchise networks, IT, healthcare and financial sector companies as well as invitees from national and European federations active in retail and distribution.
There were diverging views on the way in which the GDPR and ePrivacy Directive (which is also due to be replaced by EU regulation) will apply in a (pure) B2B context. It seems clear that prior informed consent is the sole basis for B2C e-mail marketing. However the current text of the (draft) ePrivacy Regulation is ambiguous as to whether a distinction can be drawn between corporate email addresses and individual email addresses. Nevertheless, ‘named’ corporate B2B data (e.g. fi******************@*****ny.com) is clearly personal data and should therefore be processed in line with GDPR. B2B marketers will therefore need to make a choice between using Consent, the so called ‘soft opt-in’ where there is an existing client relationship, or Legitimate Interest for their electronic communications.
Perhaps recital 47 to the GDPR which states (amongst other things) that ‘processing of personal data for direct marketing purposes may be regarded as carried out for a legitimate interest’ will provide some useful guidance. One thing is for sure the GDPR is yet to reveal all of its secrets !
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